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Build Your Financial Future - Budgeting
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 | Overview of today’s discussion:
 | We’re going to focus around budgets and talk about how
important it is to take control of your finances. |
| I’m going to help you identify how you spend your money
and how much you spend on a monthly basis |
| We’ll talk about how you can start saving for future
goals
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| What is a budget?
| A budget is a written plan for how to use your money. |
| And creating a budget is easy. You write down on paper
how much money you have coming in, verses how much money
you have going out.
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| What are some reasons you might want to have a written plan
for how you’re going to spend your money?
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| What are some things for which you never seem to have enough
money?
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| Now most people have a limited amount of money available
to them and that is why creating a budget is so important. It
will help you make good choices about how to spend the money
you have and how to distinguish between your needs and wants.
| 1ST HANDOUT –
 | Fixed expenses:
- Fixed expenses occur regularly, and the amounts
generally don’t fluctuate from month to month. (rent,
car pymt, insurance pymt, loan pymt)
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| Flexible expenses:
- Flexible expenses also occur on a regular basis,
but at varying amounts. (groceries, cell phone bills)
Individuals have some control over the amount of
these expenses.
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| Discretionary expenses:
- Discretionary expenses are those expenses you
choose to incur, and have complete control over
the amount. (entertainment, clothing, gifts, savings).
Note that money for savings is not actually an expense,
rather it’s money you set aside for future use,
but for budgeting purposes, record savings on your
budget as if it were a discretionary expense.
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| Which column(s) sort the things you or your family
NEED to buy – versus something you’d just like to have? |
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| 2ND HANDOUT - This is a comprehensive budget worksheet
that I would encourage you all to take the time to complete
at home.
| Track your expenses for the 2 previous months (Jan
& Feb). This will allow you to have a more realistic
picture for March and it will give you a written budget
to review with your financial specialist and your mortgage
representative.
- You may be surprised to see how you currently
spend your money. What may seem to be small discretionary
expenses can add up dramatically over the course
of a month or a year.
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| First complete the monthly budgeted amount for your
income.
- To determine your income, take a close look
at your paycheck or pay stub. See what you’ve earned
and what amounts have been deducted. The full amount
you earned for the pay period is your gross incomes.
The smaller number – the number you see after your
taxes, insurance, or other costs have been subtracted
– is called your net income or take-home pay.
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| Then complete the expenses portion of your budget
and you’ll see that it is broken down into the three
sections we previously discussed (fixed, flexible, and
discretionary) |
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| Then at the end of each month complete the Monthly Actual
Column and calculate the differences so you can narrow down
a very realistic budget for you and your family to live
by. Creating this personal budget will help you to see your
overall financial situation, and put you in better control
of your financial future.
| What should you do if you find that you’re overspending?
- Look for ways to decrease your flexible and
discretionary expenses.
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| Also keep in mind that even though everyone’s financial
picture is a little different, all budgets are based on
the same idea: to pay your bills, to set aside money for
savings and emergencies, and to have some spending money
left over.
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| While it may be easy to write out a budget on paper I know
that it can be difficult to live by a budget so let’s discuss
ways for staying within our budgets
| What are some things you all have done in the past to
save money while shopping?
| Shop with your budget in mind and use a shopping
list |
| Avoid impulse purchases |
| Use coupons |
| Watch for sales |
| Plan ahead for large purchases |
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| How do some of you keep your finances organized?
| Make sure you pay your most important expenses first
and make sure they’re on time! (Examples: rent, utilities,
car payment, insurance) Keep track of when things are
due and set them up for automatic payments to ensure
you will not be late. |
| Give yourself a weekly allowance for the day-to-day
expenses like groceries and transportation so you will
be less likely to overspend in these areas. |
| Keep a register of your daily checking account balance
AND Balance your checkbook at least every month. Utilize
tools like Debit card registers and Online banking to
help you keep track. |
| If you have a computer, set your budget up on Microsoft
Money or on an Excel chart. This will help you keep
track of your expenses and will chart things out visually
for you.
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| We’ve discussed how to create a budget and we’ve gone over
some tips for living within that budget; Now let’s discuss how
to start saving for your future goals.
| If you maintain a budget you will find that you have
some savings left over each month. This money can be used
in a variety of ways so it’s important again to make smart
decisions with that extra money. |
| 3RD HANDOUT - (give 5 minutes for participants to write
out their own future goals.)
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| Here’s some suggestions for how to use the money you have
started to save:
| First, set aside money for expenses you know are coming,
such as dental check-ups, school supplies, clothing, child
card, and family celebrations. |
| Start to put some of the extra money towards high interest
debt! Pick the debt with the highest interest rate and pay
extra on the principle balance. |
| Also, start putting some savings in the bank a build
up an emergency fund for unexpected expenses. Try to set
aside three to six months of take-home pay to fall back
on in case of an unexpected financial emergency. |
| Finally, set aside money for your large, future goals
– whether it’s buying a home, education, new furniture,
travel, or retirement. |
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Conclude:
| To be a good money manager, you need to distinguish between
your needs and wants. Needs are items or activities you must
have in order to live, while wants are things you would like
to have or do, but that you could live without. Each person’s
need and wants are a little different, so make sure you create
a budget that makes sense for you.
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| As you create your budget, plan how you will spend your
money so you can buy what you need first – and then with the
money left over you can save up for the things you want.
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| If you don’t have enough money to buy everything you need
and want, you may have to make “tradeoffs.” This means choosing
not to buy one thing in order to have enough money to buy another.
Making tradeoffs is a very difficult thing but when your making
a purchase stop and ask yourself:
| Is this something I need or want? |
| Is it cheaper at another store? |
| Is there something similar that’s cheaper that will
work instead? |
| Is the a better way to spend this money?
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| What questions do you have about what I’ve covered today
or any other questions about money management?
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| I have brought some extra information with me including
brochures with money management tips and an interactive CD called
Hands of Banking which includes information for all age groups. |
Information brought to you by:
Lacey L. Dorband
Personal Banker
MAC: C7607-011
560 Garden of the Gods Rd.
Colo. Spgs., CO 80907
719-388-4597 fax: 719-528-4516
lacey.l.dorband@wellsfargo.com
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